Mexican brewers FEMSA (FMX) and Grupo Modelo (GPMCF.PK) are likely acquisition targets moving forward, given the favorable stock performance and valuations investors have seen from Latin American brewing companies.
“Within the industry, it’s been well discussed that if consolidation is to continue in the beer space, which we believe it will, Mexico is the next region that is attractive,” said HSBC Securities Analyst Lauren Torres, adding that recent press surrounding discussions with FEMSA leads investors to believe a deal will happen sooner rather than later. “It is a profitable market, per-capita consumption is high; it’s still growing.”
Torres points to SABMiller (SBMRY.PK) and Anheuser-Busch InBev (BUD) as likely acquirers, citing both companies’ size and interest in Mexico as obvious motives for such a transaction.
“So when you look at these smaller [Mexican] brewers and realize that they want to compete on a global scale, which is where the industry is going, it appears that they need to be more closely aligned with the bigger brewers,” Torres said. “They do have relationships now with bigger brewers, but I think if there’s an opportunity for bigger brewers to actually step in and buy them at prices that would be attractive for the companies, then this could materialize.”
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